The article in the url below, which discusses the plastics industry, contains a number of dramatic facts. The first of which is the nature of the problem at the heart of the plastics industry:
"In a much-cited analysis from 2016, consultants at McKinsey calculated that the value of plastic disposed after a single use is $80bn-120bn a year."
Second, is the dramatic shift against plastic in recent years and the corresponding legislative responses from politicians seeking to meet the evolving expectations of their constituents:
"The UN says that last year 127 countries had restrictions on plastic bags. [In July] Panama became the first Central American country to outlaw them. Britain is considering a tax on plastic packaging made with less than 30% recycled content. In March 560 members of the European Parliament backed a law that would require 90% of plastic bottles to be recycled by 2029. Just 35 voted against."
Third, is the size of the plastics industry, which has to deal with the sudden backlash:
"Many companies in the $375bn plastic-packaging value chain—which comprises producers of oil and gas (the main feedstocks), petrochemicals giants, packaging firms and consumer brands—look ill-prepared."
Beyond that, there are a number of indications that the shift in public sentiment against plastics could affect those companies that do not alter operations to accommodate:
- "… fizzy-drinks firms that fail to reduce their reliance on virgin plastics could see annual profits shrink by 5% over the next decade or so because of regulations and taxes."
- "… recycling all plastic packaging, rather than the 15% that is reused today, could cut annual growth in demand for oil and gas from 1% to 0.5% by 2040."
The most interesting point, however, concerns the (counterintuitive) consequences of the current rush to ban plastic from our lives:
"Given the environmental footprint of substitutes like cotton bags, aluminium cans or paper boxes—which often require more energy and water to make and transport than plastic equivalents—new regulations could in fact end up doing harm to the planet."
The unintended consequences of good intentions is one of the most challenging issues for the CSR community to address. I find that it often stems from an under-valuing of economic theory. We have been studying economic exchange for centuries, and it helps explain why our society has evolved the way that it has. Markets work simply because there is no-one in charge. This reduces the influence of any single group, which diminishes the effect of the (human) biases that lead to the sub-optimal allocation of resources. When we ignore these market forces or are ignorant of the essential role they play in resource allocation, we get unintended consequences, which can easily be more damaging than the harm the change was trying to correct. That doesn't mean that the market is always 'right' (or even that a 'free' market is possible) and, clearly, plastics cause a massive amount of damage; but they are also a wonderful invention that saves lives (particularly in medical applications). As such, any decision to override the market forces that generated the solution that works (e.g., plastics) should be reasoned and driven by science, not emotional and driven by politics.
Take care
David
David Chandler
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Lacking flexibility
Lacking flexibility
July 27, 2019
The Economist
Late Edition – Final
57
